Wondering about force-placing insurance (both homeowners and flood) on loans that have balances less than the deductible.

Currently have a loan that requires force placed homeowners insurance and force placed flood insurance. The loan has a principle balance of $909 and a payoff balance of $1345. The deductibles on our force-placed policies are $1000.

1) Would we use the loans principle balance or the payoff amount?

2) Overall, do we need to force-place the insurances?


Thanks.

Personally, I would just release the collateral and collect the remainder of the loan as unsecured. It is not worth the time, effort and money, even if you write off the remaining balance.

Thanks. I like that idea and would do it if I was the decision maker on this loan. However, they do not want to release the collateral.

I did find the information on deductibles and loan amount for flood insurance in the Interagency Q&A's.

I don't however, want to "assume" the same would apply for homeowners insurance and not certain that there are any guidance out there?? Is this more of a company risk decision to make?

Flood insurance is one thing, since it is a regulatory requirement. Forcing placing homeowner's insurance on a $1,000 loan - who is kidding who here? Talk about a potential abusive practice.